delvingbitcoin

Security soft fork deployments arent risky

Security soft fork deployments arent risky

Original Postby harding

Posted on: December 20, 2024 18:39 UTC

BIP66 is characterized as a security soft fork, which is significant for its historical instance of deployment risk due to issues such as spy mining.

The activation problems it encountered underscore the complexities involved in implementing security soft forks within the Bitcoin network. It is crucial to understand that all soft forks aim to tighten the existing rules, introducing a certain level of confiscation risk. This risk, though not always apparent, affects various stakeholders, including miners, in subtle ways.

The resistance to the segregated witness (SegWit) proposal by some parties, notably Bitmain, is often attributed to concerns over losing the advantages gained through covert use of ASICBoost technology. This technology enhanced mining hardware efficiency, and SegWit's implementation would have negated this benefit, thereby "confiscating" the miners' previously unaccounted for capabilities.

Furthermore, during the development phase of BIP141, an aspect concerning the placement of the OP_RETURN wtxid commitment highlighted potential economic impacts on miners using specific ASIC hardware. A proposal requiring this commitment to be included in the coinbase transaction's final output would disadvantage about 1% of the mining power that was obligated to make a P2PKH payment to a constant address. This requirement would effectively reduce their profitability by limiting their ability to produce blocks with SegWit transactions, illustrating a clear example of the confiscation risk tied to soft fork proposals. This situation emphasizes the need for careful consideration and understanding of the broader implications of proposed changes within the Bitcoin protocol.